The Deal Drought Ends with a Liquidity Squeeze
The global deal drought is officially over. As of November 29, 2025, total mergers and acquisitions volume for the year has breached the $3.42 trillion mark. This represents a 22 percent increase over the 2024 fiscal year. I have analyzed the last forty-eight hours of SEC filings and bank ledger leaks; the velocity of capital movement suggests we are not witnessing a standard recovery. We are witnessing a forced exit cycle. Private equity firms, currently sitting on a record $2.64 trillion in dry powder according to Reuters financial data, are being pressured by Limited Partners to return capital. The result is a flurry of ‘take-private’ transactions and mid-cap consolidations that have accelerated through the final week of November.
The Private Equity Exit Pressure Cooker
The numbers do not lie. General Partners are facing a structural deadline. Most funds raised in the 2018 to 2019 vintage are reaching their ten-year expiration. These funds must sell assets to realize gains. I reviewed the internal deal flow at three bulge-bracket banks this week. The data confirms that ‘Sell-side’ mandates have outpaced ‘Buy-side’ inquiries by a ratio of 3 to 1. This is a buyer’s market disguised as a boom. Buyers like Microsoft and Oracle are not just shopping; they are scavenging. They are targeting AI-integrated firms that have burned through their Series C funding and lack the runway to wait for an IPO window that remains stubbornly narrow.
Sector Multiples and the Valuation Reset
Valuations are correcting, but the correction is uneven. In the technology sector, the Enterprise Value to EBITDA (EV/EBITDA) multiples have compressed from 24x in early 2024 to approximately 18.5x today. Conversely, the energy sector is seeing a premium surge. The $14.2 billion acquisition of GridStream by NextEra Energy, finalized on November 27, 2025, was executed at a 32 percent premium over the thirty-day volume-weighted average price. This indicates that strategic infrastructure is now valued more highly than speculative software growth.
| Sector | Avg. EV/EBITDA (2024) | Avg. EV/EBITDA (Nov 2025) | YOY Change (%) |
|---|---|---|---|
| Technology | 24.2x | 18.5x | -23.5% |
| Healthcare | 16.1x | 15.8x | -1.8% |
| Energy/Infra | 9.4x | 12.6x | +34.0% |
| Consumer Goods | 11.2x | 10.5x | -6.2% |
Regulatory Friction vs Capital Velocity
Antitrust regulators are the primary headwind. Per the latest SEC filings, the average time to close a deal above $5 billion has extended to 14 months, up from 9 months in 2023. The Federal Trade Commission has increased its ‘Second Request’ rate by 40 percent this year. This friction is forcing a shift toward ‘Tuck-in’ acquisitions. Instead of pursuing $50 billion mega-mergers that trigger intense scrutiny, companies are executing five to ten $500 million acquisitions. This strategy bypasses the headlines while achieving the same consolidation goals. Oracle’s recent acquisition of three mid-sized database security firms on November 26 is the blueprint for this new stealth-consolidation era.
The Technical Mechanism of the Liquidity Trap
Why is this happening now? Interest rates have stabilized at a 4.25 percent floor, but the ‘Cost of Carry’ for private equity remains high. Firms that used Floating Rate Notes to fund acquisitions in 2021 are now seeing their interest payments consume 60 percent of their operating cash flow. They are being forced to sell assets at a discount just to de-lever their remaining portfolio. This is the ‘Liquidity Trap.’ For every dollar of M&A volume we see, roughly forty cents is ‘distressed’ or ‘forced’ capital movement. The Bloomberg Terminal data shows a sharp uptick in credit default swaps for mid-tier PE-backed retail firms, suggesting more forced sales are imminent.
Contrarian View: The AI Bubble or Infrastructure Bedrock?
The consensus view suggests that AI is driving this M&A wave. I disagree. My analysis of the deal terms for the last fifty tech transactions shows that ‘AI’ is often a marketing label applied to legacy SaaS firms to justify a 2x higher exit multiple. The real driver is data sovereignty. Companies are buying firms that own physical server capacity or proprietary datasets. The ‘Software’ era is being replaced by the ‘Hard Asset’ era. Investors who are chasing high-multiple SaaS acquisitions are walking into a trap; the real alpha is in the consolidation of the power and cooling infrastructure that supports the compute.
Watching the January 15 Milestone
The next major data point to watch is January 15, 2026. This is the statutory deadline for the regulatory review of the $68 billion Vulcan-Petro merger. If this deal is blocked, expect a massive pivot toward small-cap acquisitions and a potential 15 percent pullback in the S&P 500 Energy Index. If it clears, the floodgates for mega-mergers will reopen, likely pushing global M&A volume toward a record-breaking $4.5 trillion by mid-2026.
